In J Hutchinson Pty Ltd v Glavcom Pty Ltd  NSWSC
126, the Court was asked to set aside an adjudicator's decision
awarding $1,263,399.72 to Glavcom Pty Ltd under a subcontract for
construction work on a commercial and residential development in
New South Wales.
Hutchinson's principal argument was that Glavcom had failed
to comply with a clause of the subcontract requiring it to deliver
a statutory declaration confirming that all workers'
compensation insurance premiums had been paid. The declaration had,
in fact, been delivered, but it subsequently emerged that not all
premiums had been paid, rendering the declaration incorrect.
The Court found that the incorrect statutory declaration still
satisfied the requirement set out in the subcontract because the
director of Glavcom did not know the declaration was false.
However, the Court went on to say that, even if the declaration
could not be relied on by Glavcom, the clause requiring the
declaration was invalid because it sought to modify or restrict the
circumstances in which a person was entitled to a progress payment
and was therefore void under section 34 of the Building and
Construction Industry Security of Payment Act 1999 (NSW).
The Court applied similar reasoning to that adopted in BRB
Modular Pty Ltd v AWX Constructions Pty Ltd and cited another
important decision of the Queensland Supreme Court in Lean
Field Developments Pty Ltd v E & I Global Solutions (Aust) Pty
Ltd  QSC 293.
There had been some doubt as to whether the reasoning in BRB
Modular and Lean Field Developments would survive a journey
south of the border.
One possible distinction between New South Wales and Queensland
was that the New South Wales legislation does, in some
circumstances, require builders submitting payment claims to
declare that certain payments to subcontractors have been made
(although those provisions did not apply in this case). Some had
therefore argued that statutory declaration preconditions were more
compatible with the New South Wales legislative regime and would be
less likely to be found invalid.
The Queensland courts have shown a greater willingness to strike
down clauses in construction contracts that limit a
contractor's right to receive a progress payment. This case
confirms that the courts in New South Wales are moving in the same
It is important for parties to a construction contract to
constantly review the terms of their agreements to ensure they are
not inconsistent with security of payments legislation in the
jurisdiction the construction work will be carried out.
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Warranties can be risk-shifting mechanisms when the party giving the warranty is not the party at fault for the defect.
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